Editor's Note
Moonlighting and Loyalty
All employees have a common law duty of loyalty to their employer. A duty of loyalty means that they will generally act in the employer's best interest and not do things like steal money or property, reveal confidential information, or compete with the employer while they're employed.
For context, there's spectrum of "care" in duties of care. Everyone has a basic duty of "reasonable care," which means to act reasonably under the circumstances. You can act in your own interests as long as you don't cause harm to others. But after that, it all depends on the circumstances.
The highest duty of care a person can have is a fiduciary duty. Fiduciary duties arise in situations where someone is acting for somebody else. I'm extremely familiar with this one because attorneys have a fiduciary duty to their clients. Other examples include real estate agents, financial advisors, partners in a partnership, and trustees of a trust. When you have a fiduciary duty, you have to put the other person's interests above your own and act for their benefit. You also have to be open, honest, and accountable. Fiduciary duties are a big deal.
An employee's duty of loyalty is higher than a duty of reasonable care but not quite as high as a fiduciary duty because employees don't have to always put the employer's interest before their own interest, but it can come close. Duties always depend on the circumstances.
The duty of loyalty comes up when employees have more than one job at the same time. Traditionally, the duty of loyalty said this was not okay, especially if the employee was working for two competitors at the same time.
The trouble is that the minimum wage has not increased in some places since 2009, but the cost of living has definitely gone up in the last 16 years. This means some people have to work multiple jobs just to survive.
Since increasing minimum wages is way more difficult than passing laws about loyalty and competition, Washington state has a law that says if you make less than 2x minimum wage, you are allowed to work more than one place at the same time. But what about the employee's duty of loyalty that says employees can't work for competing employers?
Well, the Washington Supreme Court said, why not both? Here's the story.
- Heather Bussing
In a case of first impression, the Washington Supreme Court interpreted Washington law regarding noncompete agreements to broadly protect employees who earn less than twice the state minimum wage from unreasonable restrictions on obtaining supplemental employment and to narrowly permit employers to impose restrictions consistent with the common law duty of loyalty.
In Springer v. Freedom Vans LLC (Wash. Jan 23, 2025) the issue before the court was RCW 49.62.070’s provision that governs an employer’s authority to restrict low-wage workers from obtaining additional employment. RCW 49.62.070(1) states:
“[A]n employer may not restrict, restrain, or prohibit an employee earning less than twice the applicable state minimum hourly wage from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.”
However, the RCW 49.62.070(2)(b) provides an exception:
“[t]his section does not alter the obligations of an employee to an employer under existing law, including the common law duty of loyalty and laws preventing conflicts of interest and any corresponding policies addressing such obligations.”
Thus, the court stated, noncompete agreements in Washington are presumptively invalid for low-wage workers under RCW 49.62.070(1), and only narrow exceptions apply.
Guided by this tenet, the court concluded that allowing employers to restrict employees from providing any kind of assistance to competitors would subsume the Washington legislature’s intent to protect low-wage employees and would exceed the narrow construction of the duty of loyalty.
The Washington Supreme Court held that while employers may impose prohibitions that are consistent with the duty of loyalty, those prohibitions must be reasonable in light of the facts and specific provisions within the noncompete agreement and must be consistent with the legislature’s directive that the duty of loyalty be narrowly construed in the context of chapter 49.62 RCW.
“We interpret reasonableness in the context of this statute and its clearly stated intent. In other words, the kinds of competition prohibited must be narrow in the context of chapter 49.62 RCW and noncompete agreements must be reasonable.”
The court stated that “Reasonableness is decided on a case-by-case basis” and added that “In assessing reasonableness, courts consider factors such as whether there is a need to protect the employer’s business or goodwill, whether the restraint on the employee is reasonably necessary, and whether enforcing the noncompete agreement violates public policy.”
Key Takeaway
For employers with low-wage employees in Washington, it is critical to review employee agreements to determine whether company policies unreasonably prohibit or restrict employees from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.
